I would like to thank Dr. Walter Licht for his leadership as chair of the Committee on Manufacturer Responsibility for the past three years and commend the Committee members for their participation and thoughtful contributions. It is also my pleasure to announce that Dr. Mark Stern, Kenneth L.M. Pray Chair in the School of Social Policy & Practice, will chair the Committee for the 2013–2014 academic year.

The Committee’s report for 2012-2013 is below.

—Leslie Kruhly, Vice President and University Secretary

The following report for the 2012-2013 academic year was sent on June 13, 2013 to President Amy Gutmann from Dr. Walter Licht, Chair of the Committee on Manufacturer Responsibility (CMR), in accordance with the Code of Workplace Conduct. As outlined in the Code, the CMR will review the Code annually; review the effectiveness of monitoring; review the state of compliance of the apparel licensees and review any alleged violations of the Code.

I am writing to report on the deliberations of the Committee on Manufacturer Responsibility for academic year 2012-2013. As mandated by the University’s Code of Conduct for Penn Licensed Product Manufacturers, the Committee officially met four times this year. A list of members of the Committee is below.

A good deal of the time of the Committee this year was devoted to investigating a dispute involving one of our licencees, Adidas; in my annual report for academic year 2011-2012, I did note that late in the academic year the Committee became aware of the dispute and that we would attend to the matter in the fall of 2012 (Almanac September 18, 2012). I will elaborate on our investigation in a moment, but first I will report on the Committee’s review of the disclosure forms of our current vendors. As of our last meeting on April 24, 2013, we considered responses of 61 vendors and found all compliant with our Code of Conduct and the codes of our affiliated monitoring organizations, the Workers Rights Consortium and the Fair Labor Association. Two licensees did not file responses as of our April 24 meeting and still have not; contracts with these firms will not be renewed.

The dispute involving Adidas centered on a company operating in Indonesia, PT Kizone, which had a longstanding contract for the manufacture of Adidas apparel. When the factory closed in March 2011, approximately 2700 workers at PT Kizone were due severance payments. A number of firms that had contracts with PT Kizone contributed to a pool of funds, but Adidas refused, claiming that products of the company had not been produced at the factory in the months prior to the closing (Adidas did offer some in-kind assistance to the displaced workers). This proved to be a very complicated case and Committee members did their due diligence to better understand the situation by gathering information available on the web, following investigations of the dispute conducted at other universities, and then holding lengthy interviews with representatives from the Fair Labor Association and the Workers Rights Consortium, an executive at Adidas, and a two-person delegation of former workers of PT Kizone. On the basis of our fact finding, the Committee did vote unanimously to recommend that the University not renew its contract with Adidas in the coming academic year (we would have joined a number of universities in taking such action). Then, just as the Committee convened for its final official meeting in late April, we learned that the dispute had been resolved and that an agreement had been reached between Adidas and the union representing former PT Kizone workers. We still do not know the actual details of the settlement, but we agreed on the basis of the various announcements of the settlement that the University should go forward and enter again into a yearly contract with Adidas. The Committee will continue to monitor the issue.

I will conclude this annual report by noting that I will be stepping down as Chair of the Committee after a three-year term. It has been a pleasure to work with the administrative, faculty and student members of the Committee and we can point to great progress in the last three years, including: the writing of a new Code of Conduct for Penn Licensed Product Manufacturers that extends the Committee’s oversight to vendors of non-apparel items (that extension will occur as of July 1, 2013); the development of a new disclosure form that provides us vital information in a less cumbersome fashion, aiding our assessment of compliance with our code of conduct; and the retaining of the Licensing Resource Group to manage our trademark licensing programs that too has greatly facilitate the review process. All these developments are spelled out in greater detail in prior annual reports.

Please let me know if you need further information or would like to discuss directly the issues noted in this report.

The following response from the president of the University of Pennsylvania was sent to Dr. Walter Licht on June 21, 2013.

Thank you for forwarding your report on the work of the Committee on Manufacturer Responsibility in 2012-2013. I commend you and the members of the committee for your most thorough deliberations over this past year.

I greatly value the work of the committee in providing the requisite detailed analysis and thoughtful process and am pleased to accept the Committee’s recommendation that the University enter again into a yearly contract with Adidas. I am confident that the committee will continue to monitor the situation and report to Leslie Kruhly any unfavorable changes in the upcoming year.

Also please accept my thanks for your significant contributions of time and talent during your three years of service as chair of the committee. The progression of this committee’s good work during your tenure stands as a strong testament to your commitment and leadership.